Brokers: lenders need to address staffing issues

by
Jamie Henry |
20 Oct 2014

Brokers are venting their frustration about staffing issues in the underwriting departments – at both monoline lenders and banks – and they believe it’s an issue that needs to be addressed to gain greater efficiencies and ensure client retention.

“It seems to me there is a consistent underlying problem being staffing, and by some of the tones of underwriter responses both verbal and written, they are overworked,” James, a commenter on MortgageBrokerNews.ca recently wrote.

The comment was in response to a story about the shared responsibility of both lenders and brokers to ensure expeditious deals.

“If brokers would actually put notes in their apps that make sense and stop sending deals to three or four lenders at the same time, it would likely improve service levels,” one frustrated professional at a broker channel lender recently wrote.

And brokers are more than willing to share the blame, it seems.

“As Brokers we need to make sure in our capacity we step up to make intelligent submissions supported by clear and complete notes as the first step to mitigate, but we all need to make a stronger effort on both the underwriting and submission side,” the commenter James wrote.

Still, he believes lender staffing issues need to be addressed to maximize the potential of broker channel lenders.

“I appreciate the necessity of clean files and substantial notes to maximize efficiency for underwriters and so I work to provide this,” he wrote. “I do however get multiple excuses for extremely slow turnaround times on approvals and document review where the common theme is ... ‘We have gone through a turnover of underwriters and this is quite normal for this time of year.’”

I don't know where the commenters who are in this article work out of, or who they deal with, but RMG, MCAP, CMLS have all exceeded my expectations with respect to turnaround times lately. When I say fast, I mean fast, under 4 hours fast. This is, of course, for standard applications and not self-employed where they may need more info, OR, multiple offers where they may need an appraisal.

As for "notes", I don't get it - a deal is a deal is a deal. If I was borrowing $500,000 from someone I would probably put my life's work into telling them why I should take the loan, so shouldn't this be step 1 in proper mortgage underwriting from the broker side?

JPMUon
2014-10-20 2:57:36 PM

The reality is that 99% of brokers rarely submit files to lenders that are essentially complete. You already know what the standard requirements are for a deal to be done by a lender. You know the basic documentation and you know what risk needs to be mitigated either via documents provided or by our notes in the application. MOST brokers claim that they are simply too busy and do not have the time, or they claim that their clients will not or have not provided the information. Well time for a reality check on those two – the biggest excuses.

1) Brokers are too busy… The average mortgage underwriter in Canada will adjudicate a minimum of 5 deals per day, that includes reviewing all documentation, etc. 5 deals x 20 working days = 100 deals per month / 1200 per year. Make no mistake, even declined files need work, and the less complete that file is at submission time… the more work the underwriter has to do. Incomplete notes and applications means that they have to contact the broker to get answers to questions so that they can decision the file. The thing that gets me about this… the broker SHOULD know their clients… they should be having discussions with their customer and asking the questions that they know will need answers. ANY broker that submits an incomplete file, without adequate notes, is not doing their job. The underwriters do NOT know your customers, you somehow think that they are mind readers? The fact of the matter is that NO individual broker is too busy to take the time to have a discussion with their clients and ask the right questions. There is not one single individual broker in Canada that funds 1200 mortgage on their own without any assistance.

The other part of this one… with a funding ration of barely 50% in this industry, it means that if a broker submits 100 deals to a lender they are likely to fund at best 50 of them, which means that you are wasting 50% of your underwriters time.

But hey, the banks are understaffed… right? Imagine if an underwriter received applications that were actually complete, with the notes addressing risks, and the basic documentation received. Imagine how much more they could get done.

2) Client will not / have not provided the information… This falls right into the lap of Know Your Customer. If you ASK you might be amazed at what a client will tell you. I have had MANY personal experiences where a broker has told me under no uncertain terms will the customer provide the document I am asking for… So I called the client, and guess what? Every single time they provide what I asked for. 99% of the time it is because the broker told the customer that they had all they needed, or made some commitment that they knew full well they could not live up to. They always blame the lender too, ALWAYS.

Underwriters are not perfect, but in my time I have been yelled at by almost every broker I have ever dealt with. I have adjudicated credit for some of the biggest brokers in this country, and not one of you are innocent in this. You threaten to take your volume elsewhere, you are rude and the vast majority of you treat your underwriters like garbage unless you are getting what you want – but you are not prepared to actually do the work needed. When you do get what you want, you are as nice as pie, you buy your underwriters booze and treats.

That is no different than how you would treat a pet. Is that how you really think of your underwriters? That they are there to SERVE you?

Fact of the matter is brokers... lenders do not NEED you to survive, you think customers will stop getting mortgages if brokers disappeared?

Jake Abramowiczon
2014-10-20 3:39:50 PM

Good post.

While some of the brokers you deal with (or, all) and been harassed, or treated like garbage, or threaten to take their volume elsewhere etc., there are many MANY underwriters who should not be underwriters as well. Do you know how incredibly frustrating it is for me to deal with someone who doesn't know their lending policy? Or to deal with someone who doesn't ever answer their phone or email? Or to not care if a deal closes on time? This can, and does, go both ways. Respect is a 2-way street and too often the lender will (of course) side with their staff and not see the big picture here: the end goal being client satisfaction.

Too many underwriters take things way too personally as well in my experience. We are not brain surgeons here, we work with numbers. Yet, too many times I see underwriters get their backs up against the wall because a file is escalated OR of how someone talks to you after trying to reach you 18 times that day, or some other petty reason.

Bottom line is this: "Lenders do not NEED you to survive", that's a wide-sweeping general statement. I could say the same thing the other way: I know for a fact some underwriters get paid either a volume bonus OR per-deal bonus OR performance bonus OR get paid commission. You think they wouldn't notice if I didn't suddenly deal with them?

As for 100% complete, I don't know what utopia you live in, but these days everything is reviewed two times up and down and backwards, there is no "complete" it seems. Furthermore I'm not going to get into the habit of providing my lender the luxury of full docs up front on a deal closing in 90 days, no way. Doesn't make sense.

PS good discussion

Ron Butleron
2014-10-20 4:17:38 PM

Jake and JPMU....... these are good posts that are great illustrations of the "two solitudes" of mortgage lending.

I have had my expectations wildly exceeded by several underwriters. There are some amazing people working at underwriting in Canada.

Couple of things: one of the problems we have is that every lender receives the download from Expert or Morweb differently and we as brokers don't know what parts the underwriter sees or does not see, we might think everything is clear but the underwriter is wondering why we don't give notes so they can understand the deal. Not really either party's fault on that score.

I plead guilty at yelling at underwriters, super guilty actually, regret 90% of the times I did it. Bottom line is that our livelihood is on the line and we are real invested. That is not an excuse but it is a bit of an explanation. I am not guilty of treating underwriters as pets. I have often apologised when I was out of line and I respect the job underwriters have to do every day. They would approve every deal if they could, they have rules to follow, plain and simple.

As for an underwriter asking a client for a doc and getting it after we told the underwriter the client told us to whistle, trust me that can happen and the broker was not lying. I have had clients tell an admin person they would never give up the docs and when I called the docs were sent the next day, I have had a client tell me I would never get the docs and my admin person called the next day and got them in an hour so trust me on this: it is all about how the client feels that day or was the request worded in such a way the client agreed.

as Jake suggests: one of the biggest complaints today is that the underwriter, and the doc person and the broker all may think they are finished on the file and then the pre-funding audit adds something new. That is not fun at all. Drives the client nuts and hurts the reputation of our whole industry.

I think one of the things that does help a lot is assigned underwriters. The broker and underwriter get a chance to understand each others thought process and deal habits and that helps a ton.

M. Robertsonon
2014-10-21 5:21:15 PM

People should read the response that Paul from Centum made on the other article about this subject. I know that I am a fan of his, but he truly is one of the best our industry has to offer.